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EM ASIA FX-Asian currencies cautious ahead of Federal Reserve data
March 15, 2017 / 6:40 AM / 9 months ago

EM ASIA FX-Asian currencies cautious ahead of Federal Reserve data

    * Most of the Asian currencies trading flat
    * US rate hike impact would not be severe this time-analysts
    * Indian rupee sees more gains on inflation data

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    March 15 (Reuters) - Asian currencies were largely flat on
Wednesday as investors  nervously awaited an expected U.S.
interest rate hike later in the day and hoped for more clues on
the pace of future tightening.
    Beside the expected announcement of a quarter-point rate
rise (1800 GMT), the Federal Reserve will also reveal a fresh
"dot plot" that could signal whether most of its policy
committee now expect more than three rate increases this year.  
 
    The "dot plot" is policymakers' rate projections and
provides a view into their interest rate outlook.
    Some market watchers wonder whether the new chart may point
to the possibility of four rate rises this year, reflecting a
brighter economic outlook.
    The Indian rupee and the South Korean won
 rose while most of the other regional currencies were
trading flat.
    "We expect the fed funds target range to increase by 25
basis points. This should be the start of a more prolonged, yet
gradual pace of rate hikes, in contrast to the past two years,
when the Fed paused its rate hike cycle." said Maritza Cabezas,
senior economist for ABN AMRO, in a research note. 
    A few analysts said the Asian currencies would see less
impact this time, unlike during the "taper tantrum" of 2013, in
which some currencies such as Indian rupee and
Indonesian rupiah fell sharply.
    "Last time it was a pure yield adjustment in spite of an
absence of growth or demand in the U.S. This time around, the
difference is some of the upward yield movement is coming on the
hopes of growth being posted by fiscal stimulus in the U.S.,"
said Vishnu Varathan, senior economist at Mizhuo.
    "The sell-off in (Asian currencies) will be not be as acute
this time."
    Policy decisions at the Bank of England and the Japanese
central bank alongside a Dutch election vote within the next 36
hours also kept the investors cautious on Wednesday.
    
    Indian rupee
    The Indian rupee was up 0.4 percent at 65.525 per dollar,
the highest since November 2015.
    The rupee bucked the trend of other regional currencies, as
it rose further on the back of strong election results and 
inflation data.
    On Tuesday, the data from the Ministry of Statistics showed
the consumer prices rose by an annual 3.65 percent in February
compared with January's 3.17 percent increase
    "Core pressures should begin to build in the months ahead,
effectively narrowing the room for the Reserve Bank of India to
lower rates further." said DBS in a research note.
    
 CURRENCIES VS U.S.                                      
 DOLLAR                                         
  Change on the day                                      
    at   0555 GMT                               
  Currency              Latest bid    Previous   Pct Move
                                           day  
  Japan yen           114.780           114.73      -0.04
  Sing dlr            1.414             1.4153      +0.13
  Taiwan dlr          30.887            30.966      +0.26
  Korean won          1143.800          1148.8      +0.44
  Baht                35.259            35.304      +0.13
  Peso                50.300             50.36      +0.12
  Rupiah              13365.000          13370      +0.04
  Rupee               65.505             65.82      +0.47
  Ringgit             4.447              4.448      +0.02
  Yuan                6.914             6.9139      -0.00
                                                         
  Change so far                                          
  Currency            Latest bid    End 2016     Pct Move
  Japan yen           114.780           117.07      +2.00
  Sing dlr            1.414             1.4490      +2.51
  Taiwan dlr          30.887            32.279      +4.51
  Korean won          1143.800         1207.70      +5.59
  Baht                35.259             35.80      +1.53
  Peso                50.300             49.72      -1.15
  Rupiah              13365.000          13470      +0.79
  Rupee               65.505             67.92      +3.69
  Ringgit             4.447             4.4845      +0.84
  Yuan                6.914             6.9467      +0.47
 
 (Reporting by Patturaja Murugaboopathy; Editing by Kim Coghill)
  
 
 

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